Infosys Technologies Ltd. (INFY)
Q1 2012 Earnings Call Transcript
July 12, 2011 8:30 a.m. ET

Executives

Sandeep Mahindroo – Investor Relations
S. Gopalakrishnan – Chief Executive Officer and Managing Director
S. D. Shibulal – Chief Operating Officer
V. Balakrishnan – Chief Financial Officer
Ashok Vemuri – Senior Vice President, Head, Banking and Capital Markets and Strategic Global Sourcing
Pravin Rao – Global Head, Retail
Prasad Thrikutam – Head, Energy, Utilities, Communications & Services

Analysts

Joseph Foresi – Janney Montgomery Scott
Jason Kupferberg – Jefferies & Company
Nabil Elsheshai – Pacific Crest Securities
George Price – BB&T
Moshe Katri – Cowen & Company
Rod Bourgeois – Sanford Bernstein
David Koning – Robert W. Baird
Edward Caso – Wells Fargo Securities

Presentation

Operator

Ladies and gentlemen, good day and welcome to the Infosys Earnings Conference Call. As a reminder, for the duration of this conference, all participants’ lines will be in the listen-only mode and there will be an opportunity for you to ask questions at the end of the opening remarks. Please note that this conference is being recorded. Should you need assistance during this conference call, you may signal an operator by pressing star and then zero on your touchtone telephone. I would now like to hand the conference over to Mr. Sandeep Mahindroo of Infosys. Thank you and over to you, Mr. Mahindroo.

Sandeep Mahindroo

Thanks, Rochelle [ph]. Good morning everyone and welcome to this call to discuss Infosys’ earnings release for the quarter ended June 30, 2011. I am Sandeep from the Investor Relations team in New York. Joining us today on this conference call is CEO and MD, Mr. S. Gopalakrishnan; COO, Mr. S.D. Shibulal and CFO, Mr. V. Balakrishnan, along with the other members of senior management team.

We’ll start the call with a brief statement on the performance of the company for the recently concluded quarter, followed with the outlook for the quarter ending September 30 and year ending March 31, 2012. Subsequently, we will open up the call for questions.

Before I pass it on to the management team, I would like to remind you that anything that we say which refers to our outlook for the future is a forward-looking statement which must be read in conjunction with the risks that the company faces. A full statement and explanation of these risks is available in our filings with the SEC, which can be found on www.sec.gov. I’d now like to pass it on to Mr. S. Gopalakrishnan.

S. Gopalakrishnan

Thank you, Sandeep. Good morning, good afternoon, good evening to every one of you. The top headline is we have exceeded the upper end of our guidance. Our guidance for the quarter was 1.643 billion to 1.659 billion and we’ve -- our revenue for the quarter was 1.671 billion.

The revenue grew sequentially by 4.3%. The volumes increased sequentially by 4%. On-site volumes increased by 6.8%. This typically happens when there is an acceleration of growth because most projects start on site.

There is all-round good performance by the company, so revenue per employee increased by 1.2% on blended terms. We added about 9,900 employees this quarter. We said we’ll add 6,500. Because of that, of course, our utilization is slightly lower. Utilization excluding trainees is 73.3%. Last quarter, it was 73.4%. But given that we want to be prepared to take advantage of the growth opportunities that we see, we had decided to actually recruit ahead of demand and so this was, in some sense, planned. In fact, we plan to recruit another 12,000 people in the second quarter.

We had three large deals closed this quarter, three transformation deals this quarter. We added 26 clients. The top five clients grew at the rate of 8.2% sequentially. We had five platform deals closed this quarter.

As part of Infy 3.0, Product Platforms and Solutions is a key thrust area for the company. It takes advantage of some of the trends that we see in the market in terms of Cloud, mobility, et cetera. It takes advantage of emerging engagement models like pay-for-use, because most of these are sold as services to our clients. It takes advantage of the IP that we develop, sometimes co-create with our clients. So an inventory of the IP shows that we have an increasing portfolio today.

And, lastly, this also is part of our strategy to look at a non-linear growth engine, where the growth happens disproportionate to the number of employees being added because the traditional model is that growth is proportional to the employees added, so this addresses that also. So it is very strategic for us and I’m very happy to report that we have five platform wins in this quarter. Shibu will talk about what some of these platforms are.

The revenue profile as we move to these kind of solutions are different from our traditional revenue streams because you invest upfront and then you derive revenue on a continuous basis across several quarters. So the revenue is -- the revenue profile is very different. Our EPS for the quarter was $0.67 versus a guidance of $0.63, so we’ve exceeded our guidance. We have kept our annual guidance the same, 18% to 20% growth.